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Giving aid effectively the politics of environmental performance and selectivity at multilateral development banks First Edition Buntaine
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For our families and children as well as all children of the world.
Foreword
During several decades the benefits of multilateralism were taken for granted. This is no longer the case. In this context, Multilateral Development Banks: Governance and Finance is a very timely and valuable book that offers a rich description of Multilateral Development Banks (MDBs), an assessment of their roles, and a constructive critique with recommendations to enhance their contribution to the development agenda.
A useful taxonomy of 25 MDBs is proposed and applied for the analysis of these banks as a whole and by type of MDBs. Having worked for the three different types of MDBs considered in the book, I can attest that this classification makes sense.
This volume is an important contribution to the qualitative and quantitative knowledge about MDBs practices and standards. It addresses misconceptions concerning MDBs, provides a comprehensive review of governance and funding issues that constrain MDBs’ effectiveness, and suggests means to overcome those constraints.
It is to be noted that Chap. 3 provides an adequate presentation of the important issue of additionality, whereas Chap. 5 presents a novel system of MDB-specific governance principles, which is used in an assessment and in identifying areas for improvement. It includes the standards developed for independent evaluation by the MDBs’ Evaluation Cooperation Group (ECG), considering also other areas relevant for MDBs.
The book concludes with a discussion on the future of MDBs, providing ideas and suggestions for addressing complex problems, highlighting the importance of improving governance and strengthening independent
evaluation, as well as the engagement with stakeholders and the promotion of synergies across MDBs. Thus it points out ways in which the MDBs can become more effective and efficient agents of change, playing a key role in shaping, implementing, and evaluating the development agenda.
Osvaldo Néstor Feinstein
Former manager and advisor at the World Bank, former senior evaluator and consultant for IFAD, former senior consultant with IADB, AfDB, CDB, and several UN and bilateral development agencies
Preface
Multilateral Development Banks: Governance and Finance is a novel, theoryinspired, and practice-based guide to the essence and prospects of Multilateral Development Banks (MDBs). It provides a comprehensive overview regarding virtually all MDBs, involved in lending for international socioeconomic development. With seven stand-alone chapters, the book represents insights on a wide range of often misconceived and unattended MDB aspects.
The analysis covers 25 MDBs worldwide to offer unprecedented understanding to a broad range of audiences who would be interested in the complexity and the prospects of these institutions. The MDBs are covered as a family and by groups, rather than presenting each one in detail. The grouping is based on geographical lending outreach and has three categories of MDBs: Global, Regional, and Sub-regional.
Unlike similar books and articles, which treat MDBs as banks, the authors offer a novel perspective by addressing the obscured specifics of multilateral lending institutions, revealing multiple aspects of their nature and operations, based on their unique self-regulation and governance. MDBs are addressed in a forward-looking manner, toward “knowledge banks”, “change agents”, and even “benchmark setters”, diving into the very essence of the often elusive additionality (offering of a value that is additional to what is already available in the market). The variable elements of additionality make an MDB distinguished from any other institutions or banks.
The book’s novelty and insight draw on relevant comparisons of the three regional groups of MDBs, with a focus on their governance and finance, to outline relative comparative advantages, among other key features. While criticism and reforms were addressed in the past, the book presents the importance of phased incremental elevations through an evidence-based advancement of
values, human capital, and governance. This approach is in contrast with already known polar ad hoc pressures that led to various stop-and-go reform campaigns, associated with severe side effects such as “reform fatigue” and staff disengagement.
The book reflects on the key role of most MDBs in inspiring and advancing sustainable economic development through the transfer of knowledge and funding by addressing key global challenges. It provides a constructive elaboration on issues of recent criticism, such as opaque governance, domination by “donor” countries, controversial requirements and operations, and lack of inclusiveness. The bold calls for institutional reforms and the recent geopolitical and social turmoil in the world that have challenged multilateralism for development (among other post-war values) make the book timely and relevant, with a prospect to remain such for years ahead. Therefore, it is expected to constructively enhance the ongoing debate, involving a growing network of stakeholders, directly or indirectly, dealing with MDBs and their agenda (e.g. OECD and G20).
Originated by a team with experience at a relatively small MDB (the Black Sea Trade and Development Bank), the book presents a neutral position, backed by years of diverse experiences at/with numerous MDBs, providing a hands-on insider perspective. Utilizing their wide networks, as well as insight from working closely with peer MDBs, the authors offer analysis on a number of unexplored aspects, drawing from vast ex-post evaluation resources, reflecting the wealth of lessons learned at most MDBs. This makes the book a unique and hopefully inspiring source of knowledge on a wide range of standards and practices, for the benefit of practitioners, consultants, government officials, borrowers, and researchers.
The book is expected to be of particular interest and use to a very wide range of multilateral as well as bilateral organizations and stakeholders concerned with development. It should also become a key asset to academics and students with an interest in international finance and development. It may also be useful to members of the general public interested in the complex geopolitical context of international development and multilateralism, as they have never been more important, yet challenged. It is clear that rapid transformations are taking place toward political and social upheavals, driven by populism and nationalism, triggering unprecedented debate about the challenges of poverty, inequality, peace, and sustainability. This makes the MDBs particularly relevant and important, at a time when they are pressed to deliver deeper and wider, faster and better, with even more limited resources.
The opinions and positions expressed in the book belong to the authors and not to the institutions they are associated with. The authors take
responsibility for all errors and omissions and acknowledge the importance of contributions by many other people.
The three authors worked jointly on the book upon the idea of Ihsan Ugur Delikanli. Their primary contribution is as follows:
Ihsan Ugur Delikanli: Chaps. 2, 3, 4, 6, 7
Todor Dimitrov: Chaps. 1, 2, 3, 5, 6, 7, editing.
Roena Agolli: Chap. 2, index.
Credit for photograph of Todor Dimitrov (back flap): Kalina Dimitrova.
Istanbul, Turkey
Ihsan Ugur Delikanli
List of Figures
Fig. 2.1 Unilateral and multilateral principles
23
Fig. 2.2 Multilateral delegation 24
Fig. 3.1 Subscribed and paid in capital, global MDBs (USD, billion).
Source: Authors’ compilation from MDBs’ annual reports
Fig. 3.2 Subscribed and paid in capital, regional MDBs (USD, billion).
Source: Authors’ compilation from MDBs’ annual reports
Fig. 3.3 Subscribed and paid in capital, sub-regional MDBs (USD, billion).
Source: Authors’ compilation from MDBs’ annual reports
Fig. 3.4 Equity and paid in capital, global MDBs (USD, billion).
Source: Authors’ compilation from MDBs’ annual reports
Fig. 3.5 Equity and paid in capital, regional MDBs (USD, billion).
Source: Authors’ compilation from MDBs’ annual reports
Fig. 3.6 Equity and paid-in capital, sub-regional MDBs (USD, billion).
Source: Authors’ compilation from MDBs’ annual reports
Fig. 3.7 Total borrowings (USD, billion). Source: Authors’ compilation from MDBs’ annual reports
Fig. 3.8 Gearing ratio (Borrowings + Total equity)/(Loans + Guarantees + Undisbursed commitments). Source: Authors’ compilation from MDBs’ annual reports
39
40
40
41
42
42
44
45
Fig. 3.9 Total assets (USD, billion). Source: Authors’ compilation from MDBs’ annual reports 46
Fig. 3.10 Liquidity asset ratio (Cash and due from banks + Treasury assets)/ Total assets (%). Source: Authors’ compilation from MDBs’ annual reports
Fig. 3.11 Liquidity borrowing ratio (Cash and due from banks + Treasury assets)/Borrowings (%). Source: Authors’ compilation from MDBs’ annual reports
47
48
Fig. 3.12 Total loans, debt securities and equity investments (USD, billion). Source: Authors’ compilation from MDBs’ annual reports
49
Fig. 3.13 Leverage ratio (%). Source: Authors’ compilation from MDBs’ annual reports 53
Fig. 3.14 Gross income from lending (%). Source: Authors’ compilation from MDBs’ annual reports 59
Fig. 3.15 Return on equity (RoE, %). Source: Authors’ compilation from MDBs’ annual reports
Fig. 3.16 Administrative costs ratio (Administrative Costs/Gross Income from Lending and Treasury, %). Source: Authors’ compilation from MDBs’ annual reports
61
62
Fig. 4.1 Governance structure 91
Fig. 6.1 Eligibility and concept review 169
Fig. 6.2 Appraisal and due diligence 170
Table 2.1
Table 2.2
Table 3.1
Table
Table
Table
Table
Table
Table
1 Introduction
Rationale
Address Misconceptions, Clarify the Essence of MDBs
Despite existing publications and public discourse, the role, governance, and potential of Multilateral Development Banks (MDBs) remain obscured by fragmented and often inaccurate information. These institutions remain poorly understood, implying the need for an open, comprehensive, and balanced overview, going beyond history and data.
This book sheds light on a number of misconceptions regarding MDBs, widely spread not only among the public, but even among MDBs’ stakeholders such as counterparts, shareholders, managers, and staff. These misconceptions include but are not limited to the following: (1) MDBs are UN agencies; (2) MDBs are aid/grant/subsidy funds; (3) all MDBs are subsidiaries of the World Bank; (4) MDBs are just international commercial/investment banks; and (5) MDBs provide a key share of financing in some countries but there are no tangible results.
Chapters 3, 4, and 5 (Financial Dynamics, Current Governance, and Governance Principles) constitute the core of the book, providing insight for the bumpy road ahead, outlined at the concluding Chap. 7 (The Future). These chapters provide a comprehensive review of multiple governance and funding issues that constrain MDBs’ effectiveness, presenting seven novel governance principles (Chap. 5), followed by an assessment of reality against those principles.
I. U. Delikanli et al., Multilateral Development Banks, https://doi.org/10.1007/978-3-319-91524-1_1
Compare Global, Regional, and Sub-regional MDBs
The book provides an overview of what the MDBs are often mistakenly assumed to be, in order to reveal and clarify their distinct nature and modus operandi, recent evolutions, toward future perspectives, covering all essential aspects, including the most recent challenges to institutional governance and finance. This is a timely and forward-looking response to the aggressive pressures on multilateralism and development, fuelled by contemporary tides of populism, nationalism, and protectionism, already affecting many MDBs and other international institutions.
Methodology
The book has a specific focus on recent waves of criticism and discontent with governance and results, both legitimate and ill-informed, that triggered ad hoc reforms, as well as a proliferation of “new”, “green, lean, and clean” MDBs. The recent motion of creating “alternative” new MDBs is subject of a balanced assessment of pros and cons, with the ultimate objective of suggesting feasible improvements in both the “old” and the “new” generations of MDBs.
Approach
The book covers 25—virtually all—MDBs. While a reference to particular cases is used along with specific individual examples, the important institutional issues are approached in a forward-looking perspective, dealing with and comparing three groups of MDBs—Global, Regional, and Sub-regional revealing their similarities, differences, strengths, and weaknesses. The goal of grouping and comparing is to perform “MDB family” mapping in order to suggest possible enhancements that are relevant for each respective group, as individual MDB approach would be less meaningful or efficient. Another goal is to make MDBs more aware of comparative advantages and potential to improve, toward becoming more synergetic and relevant to the pressing regional and global challenges of the future.
The methodology used in reviewing the 25 MDBs consists of an interdisciplinary process, integrating a number of interrelated components, outlined below. The issues covered by each chapter are addressed by extensive data reviews, as well as several rounds of peer-to-peer anonymous direct interviews
with key MDB staff and management, focusing on the departments involved with institutional learning and memory—the Independent Evaluation departments. The analysis is also supplemented by interviews with key MDB borrowers, to reflect their perspective. Most interviews were conducted in the course of several years, within an ongoing MDB comparative research, covering 260 respondents from 19 MDBs.
The methodology, along with the main messages of each chapter, should remain informative and relevant in the years to come, as the focus is on how to improve MDBs’ functioning, looking at the cross-cutting groups and issues. Hence, it is aimed at providing practice-based inspiration for further debate regarding the MDB evolution, with a particular attention on the need and obstacles to enhance old-fashion institutional governance, in the light of recent efforts of last generation MDBs to challenge the more traditional “old” development institutions (perceived as inefficient and donor-dominated).
Overall, the methodology constitutes an interdisciplinary mapping process, catalyzing insights from extensive reviews and discussions, involving the following key elements: (1) MDB categorization based on geographical outreach; (2) development and application of MDB-specific governance assessment framework (principles); (3) an assessment of the outreach and impact of MDBs, based on key ex-post evaluation results; (4) a financial assessment framework for MDBs, addressing inherent subsidies and privileges as unrecognized risk mitigation instrument; and (5) evaluating the accessibility of MDBs to borrowers through a borrower-based perspective. Details on the approach regarding these five elements are presented below.
Unlike existing research that treats MDBs as banks, hereby they are addressed by revealing the institutional aspects of their operations, going well beyond the bank concept—toward high-profile self-regulated knowledge banks, change agents, and franchise-based standard setters. These concepts involve relevant comparisons of the three regional groups of MDBs, with a focus on a feasible and sustainable governance-centered, rather than ad hoc, reform agenda. The goal is to improve all or most MDBs through an evidencebased advancement of values, management, staff, and governance, rather than already known polar pressures that resulted in various stop-and-go reform campaigns, triggering alarming staff disengagement and overall reform fatigue across most MDBs.
MDB Categorization
All MDBs are grouped by their regional coverage. This facilitates the process of understanding and improving different institutions, based on common denominators rather than extensive piecemeal approach. It is instrumental to demonstrate the similarities and differences among groups, as well as key issues and shortcomings without criticizing a particular individual institution. The ultimate goal is to offer feasible improvements that acknowledge MDBs as complex related institutions, providing additional value beyond mere finance, unlike conventional banks. This mainly refers to the provision of knowledge and public goods—hence arguing that MDBs are primarily knowledge banks and role models that should be treated very differently from any other financial institutions.
The categorization generally reflects the MDBs’ size and ambition and is defined as follows:
1. Global MDBs lend to several continents, covering those almost entirely;
2. Regional MDBs lend to just one continent, covering it almost entirely;
3. Sub-regional MDBs focus on a specific region that is smaller than a continent.
Governance Assessment Framework
The very specific governance systems utilized by MDBs deserve central attention. For this reason, Chap. 4, dedicated to MDBs’ Current Governance, followed by Chap. 5, which offers principles to elevate governance, are of specific importance. The latter chapter is based on a methodology involving a thorough process of reviewing and assessing respective governance systems against a set of principles, developed by the authors. This is done at group levels rather than at each MDB, but outlier cases are also addressed as a source of insight, from both negative (risk) and positive (potential) perspectives. Given the extensive experience and communication (including dedicated interviews over the past four years) of the authors in dealing with those governance systems within the MDBs, a particular attention is devoted to the less obvious but very important details and practices of implementing the governance rules, as they have substantial implications, rarely understood. The analysis is steered by a review of critical post evaluations at corporate/ institutional levels, in order to derive common issues.
Chapter 5 (Governance Principles) presents the development and application of a unique governance assessment framework, specifically tailored to MDBs. This involves MDB-customized institutional matrices, addressing the role of two couples: formal/visible vs. informal/invisible practices at all levels measured against seven core principles. Hereby an outlier assessment is also instrumental in revealing and understanding borderline governance practices that could inspire improvements, with due respect of existing constraints and feasibility considerations such as the inherent complexity and inertia in multilateral dialogue.
Financial Assessments
The application of standard instruments of financial analysis (Chap. 3: Financial Dynamics) is enhanced by applying an assessment framework for the MDBs’ financial performance, covering the complexity of their unique and poorly understood capital structure, risk mitigation, and institutional nature. This highlights the impact of important aspects such as leverage-based pricing and respective additionality-based premiums, inherent subsidies, and privileges, as well as linking financial resources with institutional safeguards and know-how, especially in a time when the latter is in the lead of providing a competitive edge. In this light, the financial resources, leverage and actual performance, are assessed in terms of their role and potential for multiplier effects, as the empirical evidence suggests that even the MDBs’ combined financing is a tiny fraction of borrowing countries’ GDP (under 1%). In other words, the concepts of additionality and catalyzing remain in the lead.
Borrower Perspective
The important perspective of the borrowers is covered by Chap. 6, revealing the various layers of the typical operational and approval cycle, often causing frustration among applicants. The ultimate goal is to help MDBs become more inclusive and user-friendly. The analysis is based on a mix of data sources, such as MDBs’ policies, ex-post evaluation reports/studies, and interviews with actual and potential clients, as well as key front office staff—covering a period of 15 years and at least two MDBs in each group of institutions (Global, Regional, Sub-regional).
Structure of the Book
The book consists of seven chapters: 1. Introduction; 2. The Nature of MDBs; 3. Financial Dynamics; 4. Current Governance; 5. Principles of Sound Governance; 6. Clients’ Perspective; 7. The Future. The chapters are related and naturally flow in that order. However, they also represent a stand-alone overview of the respective subjects. While the first two chapters are more descriptive, the other five are more analytical and forward-looking, balancing information with insight.
Chapter 2 contextualizes MDBs in terms of their institutional emergence, role, and evolution, starting with the broader issues of roots, categorization, and challenges. It groups the 25 MDBs into Global, Regional, and Subregional, to facilitate the scope of analysis. The nature of MDBs as complex public institutions is outlined, revealing common misconceptions. The review delves into a number of specific MDB conceptual features that are often poorly presented and understood—from the wider issues of multilateralism and development to the more specific political and extraterritorial dimensions, moving toward knowledge bank concepts.
Chapter 3 presents the complexity of MDB finance, revealing major differences with other institutions that may look similar, as well as across the three MDB groups. It covers capital formation, deployment and structure, borrowing and catalytic capacity, lending outreach and terms, as well as the importance of inherent subsidies, safeguards, additionality, credit ratings, and so on. While this chapter is inevitably more technical, it is written so that the wider public and policymakers can also grasp the key messages, if not all of the addressed financial metrics and concepts.
Chapter 4 goes beyond the mere description of typical MDB governance systems, as this issue is at the core of most MDB challenges and future evolution. It looks at multiple written and unwritten governance elements, identifying shortcomings and ill-based reforms that were often counterproductive, with the goal to highlight the way ahead.
Chapter 5 presents a set of novel MDB governance principles, developed by the authors. They cover virtually all aspects of governance, from the need to distinguish several Board roles and capacity, to the overshadowed importance of attracting, motivating, and nurturing the right mix of dedicated human capital. An assessment of governance against the new principles is also offered, to inspire possible improvements.
Chapter 6 is a reflection on the implications arising from key issues addressed so far from a very practical borrower perspective. In addition to an
overview of the eligibility and application process, it also reveals issues of frustration and opacity that stem from an insufficient understanding of MDBs’ complexity. Ultimately, the chapter aims at helping potential and actual clients, with a focus on private sector borrowers, to navigate the unchartered waters of MDB approval and project cycles.
The concluding Chap. 7 presents the actual and potential role of MDBs as agents of global change, as institutions with sustainable impact, beyond the mere objects of financing. This deals with their raison d’être and is built upon the main messages and conclusions of earlier chapters, suggesting how MDBs can better play this important role as a system of related institutions. Naturally, MDBs as knowledge institutions are addressed in relation to the independent evaluation function and the wealth of lessons registered, but not necessarily learned. The focus is on how MDBs may further excel in providing first-rank international leadership in high standards of norms and practices, across sectors and countries, beyond ideologies and politics—a worthwhile challenge. The chapter looks openly into the future of MDBs, in a global context, with direct reference to technological advancements and the UN Sustainable Development Goals, among other factors. It is a forward-looking reflection of all other chapters, suggesting a feasible and comprehensive reform agenda beyond the traps of the past. Key highlights include the need to elevate governance, improve the use of independent evaluation, enhance engagement with stakeholders, as well as ensure synergies across MDBs at a time of unprecedented technological and social shifts with high impact.
2
The Nature of MDBs
Introduction and Categorization
The chapter analyses the nature of Multilateral Development Banks (MDBs), revealing what makes these institutions specific and different from others. The important institutional issues are approached in a forward-looking perspective, dealing with and comparing three groups—Global, Regional, and Sub-regional—revealing similarities, differences, and some comparative advantages with the clear notion that regarding their categorization, they all belong to a complex system of public institutions. The categorization helps to perform MDB family mapping, allowing enhancements that are relevant for each respective group, as individual MDB approach would be less meaningful or efficient. A key goal is to reveal comparative advantages and potential to improve, toward becoming more synergetic and relevant to the pressing regional and global challenges of the future.
All MDBs are categorized in respect of their regional coverage. This facilitates the process of understanding similarities and differences among them, based on common denominators rather than extensive individual assessments. The regional classification generally reflects the MDBs’ size and ambition and is defined as follows:
1. Global MDBs lend to several continents, covering those almost entirely; 2. Regional MDBs lend to just one continent, covering it almost entirely;
3. Sub-regional MDBs focus on a specific region that is smaller than a continent.
I. U. Delikanli et al., Multilateral Development Banks, https://doi.org/10.1007/978-3-319-91524-1_2
This categorization is relative, as there are overlapping and border cases, arising from the dynamic nature of MDBs. While most MDBs naturally fall in those three categories, particularly those who directly target a continent such as the Asian Development Bank (AsDB) and African Development Bank (AfDB), there are some outlier institutions that are quite specific, targeting countries that are not necessarily belonging to one region/continent. The fluid nature of the classification means that its key role is to facilitate the analysis rather than push MDBs into watertight boundaries.
The MDBs’ categorization, based on geographical lending outreach, is presented in Table 2.1.
Table 2.1 Classification of MDBs in terms of regional coverage by lending
Bank/Regional
coverage Established Full name
Global World Bank
IBRD 1945 International Bank for Reconstruction and Development
IFC 1956 International Finance Corporation
IDA 1960 International Development Association
IFAD 1977 International Fund for Agricultural Development
Regional
CEDB 1956 Council of Europe Development Bank
EIB 1958 European Investment Bank
IDB 1959 Inter-American Development Bank
AfDB 1964 African Development Bank
AsDB 1966 Asian Development Bank
IsDB 1975 Islamic Development Bank
EBRD 1991 European Bank for Reconstruction and Development
NDB 2014 New Development Bank (formerly referred to as the BRICS Development Bank)
AIIB 2015 Asian Infrastructure Investment Bank
Sub-regional
CABEI 1960 Central American Bank for Economic Integration
EADB 1967 East African Development Bank
CDB 1969 Caribbean Development Bank
CAF 1970 Development Bank of Latin America (formerly referred to as the Corporación Andina de Fomento)
IIB 1970 International Investment Bank
BADEA 1973 Arab Bank for Economic Development in Africa
WADB 1973 West African Development Bank
NIB 1976 Nordic Investment Bank
PTA 1985 Eastern and Southern African Trade and Development Bank or the Preferential Trade Area Bank
BSTDB 1997 Black Sea Trade and Development Bank
ETDB 2005 Economic Cooperation Organization Trade and Development Bank
EDB 2006 Eurasian Development Bank
Source: Authors’ compilation
It is noteworthy that this classification is not absolute, as there are several overlapping and border cases, often arising from the dynamic nature of MDBs. While some MDBs such as the AsDB and AfDB directly fall into the regional group, some outlier institutions are not so easy to categorize. Good examples of outlier cases are the European Bank for Development and Reconstruction (EBRD), the European Investment Bank (EIB), the Islamic Development Bank (IsDB), and the New Development Bank (NDB):
1. EBRD’s mandate focuses on the former communist countries but since recently it also covers Turkey, Greece, and even parts of Africa. Due to the wide scale/coverage that is deemed equivalent to a continent, EBRD falls in the Regional group.
2. Likewise, the EIB, the infrastructure finance arm of the EU, is focused on the EU member states but also invests elsewhere—in African, Pacific, and Caribbean countries. It is also noteworthy that the EIB, like a few other MDBs, is not exactly a “Development” Bank, except in the recently originated activities outside the EU. With all these in mind, the EIB also belongs to the Regional group, as its geographical scope is considered equivalent to a continental coverage.
3. The IsDB invests in many countries across the world and is therefore not focused on a specific region, but still comes short in having a global coverage in terms of two or more entire continents and therefore falls in the Regional group as well.
4. The NDB covers just a few countries (BRICS—Brazil, Russia, India, China, and South Africa) across different continents. However, as those countries are particularly large and do not fit a specific sub-region, it also falls in the Regional group.
These examples illustrate the overlapping and relative nature of the categorization, implying that it is utilized to facilitate the analysis rather than to assume absolute boundaries across the three groups.
The Bretton Woods Institutions
By the late 1930s and early 1940s, the concept of economic development in the contemporary sense began to emerge. The economic and social needs of the post-war world were primarily addressed by the prominent British economist John Maynard Keynes, inspiring policy makers. Harry Dexter White, an American economist, was a key figure in envisioning the set of
institutions that had to be created over the visions of John Maynard Keynes. In 1942, White paved the path toward the fundamentals of a development policy as he prepared a proposal for a “United Nations Stabilization Fund and a Bank for Reconstruction and Development of the United and Associated Nations” which would provide the basis for post-war international monetary reform (Anderson-Gold 2011).
White considered the Keynes’ principles from a more general perspective and used them in the US proposal to suggest national and international policies that would (1) foster economic growth by encouraging international economic and monetary cooperation through the stabilization and regulation of the national systems of exchange rates and (2) encourage economic and social security in war-torn areas of Europe through rebuilding economic and financial infrastructure throughout massive supply of capital that will be needed for reconstruction, relief, and economic recovery (Stiglitz 2003).
The proposal called for the creation of two related institutions with resources, powers, and structure adequate to meet the major post-war needs. For international currency matters, the International Monetary Fund (IMF) was to be established, which would recommend and enforce rules to install a system of convertibility of currencies and ensure a degree of exchange-rate stability—indispensable for a multilateral system of payments and trade. For assisting the economic development and reconstruction of post-war Europe, the International Bank for Reconstruction and Development (IBRD) was to be established—broadly recognized as the World Bank, with the purpose of providing funding and technical assistance for the economic reconstruction of war-ravaged areas of Europe, mainly by encouraging capital inflows into the region from surplus countries (Lipscy 2015).
In 1944, the United Nations Monetary and Financial Conference took place at the Mount Washington Hotel in Bretton Woods, New Hampshire. The broadly referred to as Bretton Woods Conference agreed to regulate the international monetary and financial problems after the conclusion of the World War II, and sealed the negotiation for the establishment of the World Bank and the IMF. The agreement is a milestone toward more orderly international relations and multilateralism on a global scale and toward having agencies predominantly adapted to maintain such relationships. The United States, of course, was and still is a dominant element.
With the Congress’ approval of the Marshall Plan in 1948, the US preeminence was confirmed (Bordo and Eichengreen 2007). The organizational patterns of the IMF and the IBRD gave birth to a new track of thought— development diplomacy, where the American role was critical.
Proliferation: Global, Regional,
and Sub-regional
The World Bank and the IFAD
Established in 1944, the World Bank is the world’s largest provider of development finance, which lends worldwide to more than a hundred countries in several continents. Many of the features that were implemented and recognized in the context of the World Bank became a standard for most of the other MDBs set up later on.
From the outset, the World Bank was an institution which was to be owned and whose capital would be provided by governments. The commencing authorized capital ($10 million) comprised 20% paid-in capital or seed money and 80% callable or guaranteed capital. The callable capital worked as guarantee fund against which the World Bank could borrow commensurately large amounts in the international capital markets. Albeit, this was not as a matter of fact paid by the member countries, it still determined the credit rating of the Bank (Culpeper 1997).
The capital structure, which evolved under the aegis of the World Bank, became a cornerstone of the international financial system. It was considered as a mechanism to secure the obligations to the bondholders in the capital market to a guarantee by shareholders to pay off the needed amount to the full value of bonds outstanding. Thus, the bonds issued by the World Bank depended on the implicit guarantee of the shareholders, rather than on the loan repayments of the borrowing countries. Given the innovative side of this mechanism, during the 1950s, the World Bank managed to successfully raise money on the international capital markets, even though it was quite modest in size and lent to few countries that could afford the market interest rate (Harriss 2002).
With the increase in the scale and complexity, the World Bank established several affiliated institutions. The first addition was the International Financial Corporation (IFC) in 1956, which was created to supplement the IBRD’s governmental orientation, by lending to private corporations, usually together with other investors. The second addition was the International Development Association (IDA)—created in 1960 to offer concessional or soft lending to government and private sector firms in low-income countries.
The establishment of IDA as one of the principal component of the World Bank Group1 shifted the balance of power between shareholders and management in the World Bank. The IBRD was funding its lending operations primarily by selling low-interest, high-rated bonds, backed by prudent financial policies and strong financial support of their members. The accumulated
funds were then on-lent at slightly higher interest rate with relatively long maturities (15–20 years) to creditworthy countries. However, concessional loans of IDA had an interest rate of zero or less than 1% and were made on terms up to 40 years, usually with a 10-year grace period. As the funds for concessional lending could not be obtained from private markets, member countries made direct contributions to fund IDA, causing the balance of power between shareholders and management to shift to donor members.
Along with the World Bank, the International Fund for Agriculture Development (IFAD) is a global international financial institution and specialized agency of the United Nations, providing development finance worldwide. Although IFAD is an outlier as noted in Chap. 1, it is included in the categorization of MDBs, as it has recently started to borrow from the international financial markets, essentially operating as an MDB. The agency was established in 1974 at the World Food Conference in Rome, in the wake of a global food shortage, which caused widespread famine, especially in the African countries. Three years after the Rome conference, IFAD was set up as an international financial institution. Since then, it has specialized in financing agricultural development projects aimed at food production in developing countries (Mosley and Hulme 2006).
The Regional MDBs
The members of regional MDBs are regional developing countries and donor countries, which can be both regional and non-regional. These institutions were modeled around the IBRD concept, to lend to one continent, covering it almost entirely. Two significant factors triggered the creation of these MDBs. The first one was the aspirations of developing and/or financially distressed countries for greater regional autonomy and economic stability, by addressing regional and national needs. The second one was the US geopolitical and geoeconomic strategic interest during the Cold War. The latter factor was crucial for overcoming the US defiance toward the establishment of the InterAmerican Development Bank (IDB) and the AsDB. The respective response of the Soviet Bloc countries, who did not participate in IBRD or the followup regional MDBs, was to create in 1963 their own sub-regional MDB (The Moscow-based International Bank for Economic Cooperation, still operating today as the International Investment Bank [IIB]).
In Latin America, the proposal for a regional Inter-American Bank predated the idea for the World Bank. Latin American countries requested the
United States’ help to improve the international cooperation in the region at the First International American Conference in Washington DC, in 1890. However, their demands for greater development financing were only answered in 1959, as a response to the US concerns about the spread of communism in the repercussions of the Cuban revolution (Santiso 2000).
The initiative for the IDB came from politicians who were advocating for cooperation and integration in regional forums, established by developing nations to discuss solutions for the marginalized nations in the post-war world order. The establishment of the IDB was ratified by 18 countries (the United States and 17 regional members). The United States was the largest shareholder of the IDB, controlling 42% of the voting power. In the 1970s, Canada and then non-regional countries, such as Japan and European countries, were admitted as non-borrowing or donor members. Unlike the World Bank where the voting share was heavily weighted in favor of developed nations, the IDB provided in its establishing articles that the voting share of regional developing countries could not be less than 50% of the total. The IDB was granted a builtin soft-loan facility, known as the Fund for Special Operations (FSO), and in 1986, the Inter-American Investment Cooperation (IIC) was established as a private sector affiliate, analogous to the IFC in the World Bank, focusing on financing of small- and medium-sized enterprises (Ocampo 2007).
In the interim, two regional MDBs emerged in Europe, the Council of Europe Development Bank (CEDB) in 1958 with an exclusively social mandate (dealing with problems of refugees and displaced people in Europe after the World War II) and the EIB, the European Union’s long-term lending institution established in 1958, to facilitate the European integration and supplement the IBRD in offering market-based loans for infrastructure, sustainable development, and private sector development. Both MDBs were borrower-led and did not accommodate non-borrowing or donor shareholders, as a main difference to IBRD.
In contrast to the IDB, the initiative for the AsDB came from a relatively developed donor country—Japan, who had a prevalent influence by tradition. The AsDB came with an explicit mandate to foster economic growth and cooperation in Asia by investing in potentially viable projects in infrastructure. By 1974, a concessional loan facility was established—the Asian Development Fund (AsDF), the general purpose of which was to lend to lowincome countries in the region.
The most distinguishing feature in the organizational dynamics of the AsDB is its strong Japanese influence. It was the only MDB at that time where the United States has been co-dominant with another shareholder (upon inception, the United States and Japan had each 17.1% of the votes; later
declining to 12.7%). In order to preserve the Asian influence, the AsDB’s charter requires at least a 60% voting majority for regional members, including non-borrowing nations—Australia, Japan, and New Zealand. As such, the AsDB has always been classified as a donor-dominated institution (Kilby 2006).
The AfDB was funded entirely by borrowing members. Its initiative came from Africa, and for the first 18 years, membership at AfDB was restricted only to African countries. The founders believed that the admission of nonregional donor members would endanger the ownership and governance, and also threaten the newly gained independence of the African countries. Such a view is still valid for some of the newer MDBs with a particular reference to sub-regional ones, addressed further.
The absence of a developed member in the region divested the AfDB of funds. South Africa was the only exception, but its membership was proscribed until 1995 on account of its apartheid policies. Soon after its foundation, it became a conundrum to raise the financing resources in the international capital markets based on the African callable capital subscription. Eventually, the AfDB fettered itself to lending only out of its paid-in capital. Originally its authorized capital was $250 million, nearly one half of which was expected to be paid-in capital—but only $52.6 million was actually paid in, which shrunk the lending potential and credibility even further.
In the early 1970s, having come to the conclusion, that it was better to gambit some measure of autonomy with the purpose of building a more influential institution, the AfDB started discussions to open membership to nonregional countries. In 1973, a concessional financing facility, known as the AfDF, was created to direct concessional resources from donor countries to the region. The AfDF was inaugurated with $82.6 million in grants from 13 non-regional members (mainly Japan and Canada). Despite intense polemics among the African members, the voting power in the AfDF was split 50–50 between regional and non-regional members.
By 1992, 25 non-regional countries, including the United States, had received the assent to membership in the AfDB and controlled 35.5% of the voting share, while regional members accounted for a majority of 64.5%. Developing member countries held a voting majority, but in fact, the developed country minority shareholders controlled access to resources and capital increases and replenishments.
In the early 1970s, substantial progress was made in the field of regional financial cooperation even in the Arab region with the establishment of the IsDB in 1974. The capital was subscribed in a new account currency, the Islamic Dinar (ID), and at its inception, the 22 member countries contrib-
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Title: Friend and foe Or, the breastplate of righteousness
Author: A. L. O. E.
Release date: February 16, 2024 [eBook #72968]
Language: English
Original publication: London: Gall & Inglis, 1875
*** START OF THE PROJECT GUTENBERG EBOOK FRIEND AND FOE ***
Transcriber's note: Unusual and inconsistent spelling is as printed.
"I do like to look on such a sunset," Norah said, adding softly, "it makes one think of Heaven."
FRIEND AND FOE; OR,
The Breastplate of Righteousness.
BY A. L. O. E.
AUTHORESS OF "THE CLAREMONT TALES," "THE SILVER KEYS," "THE WHITE BEAR'S DEN," ETC.
LONDON: GALL & INGLIS, 25 PATERNOSTER SQUARE. AND EDINBURGH.
CHAPTER
I. SMALL LEAKS
II. THE LITTLE MAID
III. PROFESSION AND PRACTICE
IV. PUTTING ON ARMOUR
V. PROVING THE ARMOUR
VI. HELP IN NEED
VII. ANOTHER TRIUMPH
VIII. THE CANVAS BAG Friend and Foe;
CHAPTER I.
SMALL LEAKS.
"You'll never succeed, Ned!" cried Bessy Peele, with a little laugh, as she stood watching her maimed brother's attempts to write a letter.
Twice, the wind coming through the cottage door had sent his paper fluttering to the ground. Ned had raised it, and then tried to fix it by placing a pebble upon it, but the paper had slipped from under the pebble as soon as the sailor had begun to write.
"It's not much," continued Bessy, "that a one-armed man can do."
"He can polish up your window, Bessy, and carry your basket, and get your garden into trim order," answered the sailor with cheerful good humour.
And leaving the cottage for a few moments, Ned soon returned with a brick, the weight of which as effectually fastened down the sheet as if he had had a left hand to rest upon it.
"Safe at anchor at last!" cried Ned. "But this is a clumsy way of getting over the difficulty. Necessity, folk say, is the mother of invention. I'll get the carpenter, as soon as I have the ready rhino to pay for it, to screw on some bit of timber to this maimed stump of mine, with something like a hook at the end; 'twill serve almost as well as a hand, and save me and my friends no end of trouble."
"Not a bad thought!" cried Bessy, who was apt to grumble at having to give the little assistance which the one-armed sailor required. "You needn't wait, Ned, till you've the money. Bill Jones, who works at the carpenter's, is a handy lad, and owes me a deal of kindness for nursing his mother in sickness. He'll manage to look out a good bit of hard wood and a hook, will make what you want cleverly, and never say a word about payment."
"I'd rather wait till I've shot in my locker," said Ned. "The poor lad's time is his money."
"His master's rather," observed Bessy. "But old Stone is an easy-going man, and does not keep a very sharp look out. Why Bill Jones—a good fellow is he—made a little chest of drawers for his mother, all of mahogany wood, and I don't believe that his master so much as guessed that he had not been working from morning till night every day in the week at the fittings in Sir Lacy Barton's study."
Ned had begun his letter, but he raised his head, and the ink dried on his pen as he inquired, "Do you mean that he helped himself to his master's wood, and used up the time which belonged to his master, to make a chest for his mother? And do you call him 'good' for this?"
"I do call him good, and clever too!" answered Bessy, sharply. "Isn't it right for a lad to care for his mother? And wouldn't it be right for him to do a good turn for a poor maimed sailor, who has lost his arm serving the Queen?"
"Would it be right in Bill Jones to carry off Sir Lacy's purse to give to his mother; or, if I chanced to be in want, to help a poor maimed Jack-tar like me?"
"How can you ask such idle questions?" cried Bessy Peele, in a tone of contempt. "Why, if Bill Jones did a thing like
that, he'd be clapped into jail directly."
"Keep to the question, mistress!" said Ned, with a playful twinkle in his bright blue eye. "I didn't ask whether it would be safe for Bill to take Sir Lacy's purse, out of love for his mother, or kindness for me, but whether it would be right for him to be generous at the expense of another man."
"Taking a purse! That would be downright stealing!" cried Bessy.
"And are not the wood and the labour he pays for, as much the carpenter's property, as the purse is Sir Lacy Barton's? Is it not just as wrong to rob the one as the other?"
"I never knew a man with such particular notions as you have!" cried Bessy, tossing her head. "You're always pulling one up sharp with the question whether a thing is right!"
"Because," said Ned Franks, gravely, "we have to do with a righteous God. Mind you, Bessy, the Bible is the only chart as is given us to steer by, and when one sees in that chart, 'provide things honest in the sight of all men,' *—'He that is faithful in that which is least is faithful also in much, and he that is unjust in the least is unjust also in much,' † one learns that the safe channel is a very narrow channel indeed, and that if we don't carefully keep the right course, we shall run the vessel aground."
* Rom. xii. 17. † Luke xvi. 10
"Well," said Bessy, as she laid out some linen to iron, "I for one will never believe that the great God above ever notices such little matters as these you speak of."
"Maybe you'd have thought it a little matter for Eve to pluck a fruit, but 'twas a matter that let in death and misery into a world," said Ned. "The skipper of the first craft as ever I sailed in, thought it a little matter when, one evening, our vessel just touched on a rock, as he fancied; he smoked his pipe, drank his grog, and turned into his cabin, and never dreamed of the small leak down below, till he was wakened in the morning with the cry of 'Three feet water in the hold!' The vessel was as nigh lost as could be, with all the hands on board. And 'tis so with our souls, Bessy Peele. The little sins, as we call them, are the little leaks in the timber, and if one goes to the bottom, 'tis all the same, whether the water came in by a big hole or a small one."
Bessy banged down her hot iron on the shirt before her with a noise and bustle which seemed to say, "I want no more of this preaching."
Ned Franks quietly dipped his pen again and went on with his letter.
Presently Bessy looked towards the door of her cottage.
"I thought Norah would have been here afore this," she observed; "she generally manages to walk over early from the town."
"You said, if I remember right, that her mistress kindly allows her to visit home the first Monday in every month."
"Yes," replied Bessy Peele, "and it's a great pleasure it is for Norah and me to meet. She's a good girl, if ever there was one. I've had a deal more comfort in her than in Dan. She has been in her place now for more than a year, and I don't believe that Mrs. Martin has had ever a fault to find with my girl."
"What sort of a lady is Mrs. Martin?" asked Ned.
"Oh! One of your saintly ones," cried Bessy. "Always has my girl up to read the Bible to her of an evening, and sees that she goes to church once or twice every Sunday. The lady's getting a little old, and a little blind, Norah says, and can't afford to give good wages, but a respectable place like that is a stepping-stone to a better."
"Bessy," cried the sailor, "if your girl is moored in a safe good harbour, don't you be in haste to have her heave anchor and hoist sail; there's more to be thought of in a place than the mere matter of wages."
"Ah! But—" began Mrs. Peele, but she interrupted herself with an exclamation of pleasure—"Here she is!"—as a bright, pretty-looking girl of fourteen ran eagerly into the cottage.
Norah, for it was she, was warmly welcomed by her mother, and then presented to the one-armed sailor.
"Here's your uncle, my dear, whom you never have seen afore, who's been in the storms and the wars."
"And who is heartily glad to see you," cried Ned.
CHAPTER II.
THE LITTLE MAID.
NED and Norah very soon made friends with one another. There was a cheerful kindliness about the maimed sailor, that set the young girl at her ease.
"He seems so frank and pleasant," thought Norah, "and there's such a bright honest look in his eyes, that I'm sure I shall like him extremely."
"She's a trim little vessel," thought the sailor, "with a pretty figure-head of her own; but I wish that she carried a little less bunting, she'd look better without all those flowers."
Norah had indeed a sweet innocent face, but her dress was not such as beseemed her station in life—it showed an effort to look fine, which did not prevent it from looking shabby. The gay-coloured dress was stuck out by a hoop; the bonnet, which was rather an old one, was trimmed with some large half-faded pink flowers. To the simple-minded sailor it became the young maiden so ill that he was glad when it was taken off, and Norah's neatly braided hair appeared the sole ornament of her head.
But Mrs. Peele was not of the sailor's opinion. "My dear, what pretty flowers!" she exclaimed, taking up the bonnet in her hand, and turning it round to admire the trimming.
"Sophy Puller gave the flowers to me: was it not kind?" said Norah. "And she gave me this too," she added, pulling out of her dress a gaudy glass brooch, made to imitate diamonds and rubies.
Mrs. Peele was charmed with the brooch, and handed it over to Ned, who held it between his finger and thumb, looked at it for a moment, and then returned it in silence to its owner.
"Who is Sophy Puller?" asked he, thinking to himself, "I hope that the giver of that trumpery is not of a piece with her gift."
"She's a milliner's apprentice, and such a dear girl!" cried the artless Norah. "She often drops in to tea, and we have such famous gossips together over our bread and butter! It is so friendly and pleasant!"
"And do you get your mistress's leave to entertain this messmate?" inquired the sailor.
Nosh's smooth cheek flushed, and she looked a little embarrassed, as, without answering her uncle's question directly, she said, "I don't think there can be any harm."
"Harm indeed!" exclaimed Bessy Peele, warmly. "It would be hard indeed if a poor girl could not give a slice of bread and butter to a friend."
"At her mistress's expense," added Ned.
Norah appeared uneasy and confused, and turned her inquiring eyes on her uncle, as if he had suggested some painful doubt which had never before entered into her mind.
Mrs. Peele called away her attention.
"Let's see what you've brought in that parcel, my darling; it's never empty-handed as Norah comes to her mother!"
The parcel was carried to the window, and Ned Franks, who had no curiosity to know its contents, sat down again to his writing.
His ear was, however, soon caught by his sister's scornful exclamation, "Tea indeed! You don't mean to say that Mrs.
Martin gives four shillings a pound for this powdery trash!"
"Bessy," said the sailor, looking up with a smile, "if the lady kindly sends you a present, don't you take it for better or worse?"
Again Norah looked at her uncle with that perplexed inquiring gaze, and seemed about to speak.
But her mother gave her a nudge, with a whisper, "Say nothing, he takes things so oddly."
Neither the nudge nor the words escaped the quick perception of Ned.
"Sunken rocks!" thought he. "I must sound that poor simple child as to how she came by that tea, if I chance to catch her alone."
Dan Peele soon came home from the fields, and his sharp cunning features were lighted up with such honest joy at sight of his sister, that Ned Franks said to himself, "There's a warm corner in the heart of that boy, I've judged the poor fellow hardly."
"I'm always so glad when you come home, Norah," cried Dan, almost dancing with glee, making the party laugh by adding, "then mother gives us such a thundering big pudding, and puts on the jam so thick."
Norah's presence indeed added not a little to the cheerfulness of the little circle at the family meal. She laughed and chatted gaily, and told many a little incident of her life with Mrs. Martin.
"Did I ever tell you, mother, of my first trying to read aloud to my mistress? The dear teacher at our school used to say
that I read well—but wasn't I a bit frightened at the notion of having to read aloud in a drawing-room! I could hardly get up my courage when the bell rang, and I had to go up on purpose to read. There was the old lady in her big armchair, and the lamp with its shade on the table."
"'Take a seat, Norah,' said my mistress kindly, 'and go on with the work where I left off.'"
"'I'm glad it's to be sewing, not reading,' thought I. But wasn't I puzzled when not a bit of work could I see, nothing on the table but one old-looking book! I peeped about here and there, without daring to get up from my chair, wondering where the work could be hidden, while my mistress was wondering all the while why I did not begin."
"'What are you waiting for, Norah?' said she."
"'Please, ma'am, I can't find no work, I think it must have dropped under the table?'"
Norah's little story was duly laughed at, especially by Dan, who did not understand the joke, as he knew as little as his sister had done, that a book can be spoken of as "a work."
"Oh and another time I was so stupid!" Norah went on, laughing at the recollection. "I was reading to mistress a large new book, that had a good many pictures in it, when she dropped asleep as she sometimes does."
"When, just waking from her nap, 'Norah,' says she, 'I'd like to look at the plates.'"
"Up jumped I with a 'Yes, ma'am, directly; shall I bring the kitchen plates or the china?'"
Again there was a burst of merriment at the blunder of the little maiden.
"Do you like the reading, Norah?" asked Ned.
"Why, yes, sometimes," answered the lively young girl, "only the sermons are rather too long."
"Sermons!" exclaimed Dan and his mother in a breath; and the latter added, "I hope you get some other reading besides that."
"Oh, yes, history and travels; and then, you know, Sophy Puller lends me books to read by myself."
"What sort of books?" asked the sailor.
"Oh, delightful books!" exclaimed Norah. "I'm in the middle of one now, all about a dreadfully wicked woman who killed her husband, and I think she'll be hanged at the end—but she had great excuses you know."
"That must be jolly reading," cried Dan; but Ned Franks shook his curly head.
"I very much doubt that such reading is good for our little lass," observed he.
"Well, I own, it's very tiresome to have to leave off in the middle to sweep a room or cook a dinner," cried the girl, "but I sit up late at night to make up."
"I don't look on that Sophy Puller as your true friend," observed Ned Franks.
"Oh, don't say that—she is so kind: she wanted me to come out and spend the evening with her sometimes, when she
has each fun, and dancing, and larking with her companions. I should have liked of all things to go; but when I asked mistress, she shook her head and said that she did not approve of young girls being out late at night."
"I say, wasn't that a shame?" exclaimed Dan.
"It's a hard thing that she should keep you so tight, and not let you have a bit of fun, when you're slaving all day," cried Bessy.
"A hard thing is it," said Ned Franks, "that the lady won't let your child go swimming amongst the sharks?"
"If I was you, Norah," cried Dan, "I'd slip off without leave after the old dame was abed; you said she shut up soon after eight."
"That's just what Sophy told me," said Norah.
"But you was afraid, I s'pose, of being caught," observed Dan.
"I was more afraid," replied Norah, simply, "that mistress might be taken ill in the night, and you know she depends upon me."
"God help that poor child, she's beset with snares," thought the one-armed sailor. "When she comes home she learns nothing but dishonesty, covetousness, and untruth; at her place there's an evil influence drawing her in like a whirlpool to folly, and may be to worse. And she so simple and artless. Simple and artless now, but if she have much to do with that Sophy Puller, it is not long that she'll keep so. I should like to drop in a word of warning, but I can't do it here, as Bessy is always driving on the opposite tack."
"Norah," he said aloud, "will you let me walk back with you in the evening?"
"I should be so glad to have you," cried the girl, "and then I need not hurry back so early. Mistress told me unless my brother or some one would see me home, I was not to stay out after sunset."
"A careful mistress," observed Ned.
"The cross old crab!" exclaimed his nephew, both speaking at the same moment.
"Oh, no, she's not cross," cried Norah. "My mistress is good, very good; I never knew any one like her but Mr. Curtis, our vicar, and my dear kind teacher at school."
"You'd like her a deal better, I guess, if she wasn't so strict," said Mrs. Peele.
"I don't know, I'm not quite sure of that," replied Norah, in a hesitating tone. "I should like Mrs. Martin to see more company, and to let me have a little more freedom, but she does not keep me in out of crossness. If you only knew how good she is to the poor, and how dearly she loves her Bible, and how patient she is when in pain, and she suffers a great, great deal, 'specially from her poor eyes, but she never murmurs at all!" The girl's face kindled with emotion as she spoke of her kind old mistress, and Ned watched it with a feeling of pleasure, while his heart warmed towards his young niece.
"Blessings on the child, they've not spoilt her yet," thought he. "She sees the light, and she's bearing towards it; shame is it that those nearest to her should try to turn her out of her course."
CHAPTER III.
PROFESSION AND PRACTICE.
"MIND now that you manage to give the old woman the slip, and have a jolly night of it with your friend Sophy Puller—" such were the words with which Dan Peele parted from his sister, as she set out with the sailor on her long walk back to the county town in which her mistress resided.
It was a glorious evening. The sun had just stink below the horizon, but lines of glowing fire showed where his orb had dipped below the blue hills, and his beams had left a rich rosy flush on the clouds that floated above.
Ned Franks, as he gazed on that beautiful sky, felt that the young girl who tripped on by his side shared his sense of peaceful enjoyment.
Norah was the first to break silence. "I do like to look on such a sunset," she said, adding softly, "it makes one think of heaven."
"The home we're bound for," said Ned.
"I hope so," murmured Norah, in a tone that was scarcely above a whisper.
"And how do you think we are ever to get to heaven?" asked the sailor.
